“Little else is required to carry a state to the highest degree of opulence but peace, easy taxes, and a tolerable administration of justice.”
– Adam Smith
Today is an important day as we approach the 250th anniversary of our nation’s founding.
On March 9, 1776, the most important book ever written on the road to prosperity was published in Great Britain, which was still America’s motherland at the time.
Written by a quiet but influential Scottish professor named Adam Smith, it is called The Wealth of Nations.
It was the intellectual shot heard around the world – a declaration of economic independence.
The Scottish philosopher predicted untold riches for any country that adopted what he called his “system of natural liberty.”
What was his message? Give citizens their economic freedom – what we might today call “democratic capitalism”!
In his system of natural liberty, every man is “free to pursue his own interest” under robust competition with minimal government interference. In the very center of The Wealth of Nations, he called it “the invisible hand” of liberty.
Today we call it free-market capitalism, free enterprise, or laissez-faire.
Natural liberty includes the right to buy goods from abroad without tariffs or import quotas… the right to choose your own occupation… the right to set your own prices and wages… and the right to save and invest your capital without government restraint.
Economic and political freedom was rare in those days, but under the influence of The Wealth of Nations, many nations have gradually adopted the Adam Smith model, as evidenced by the rise in the Fraser Institute’s Economic Freedom of the World index.
According to former Fed Chairman Alan Greenspan, America adopted Adam Smith’s formula for success more than any country, especially after it won its hard-fought war for independence.
Within 100 years, the United States became, as Smith predicted, the “most formidable” nation on Earth, even surpassing the British empire in influence.
Adam Smith promised freedom and prosperity to countries that adopted three policies: “peace, easy taxes, and a tolerable administration of justice.”
Most of the time, the United States has done just that.
As Ben Franklin wrote, “The system of America is universal commerce with every nation; war with none.”
The U.S. Constitution provided peace, prosperity, and stability from sea to shining sea. For over two centuries, we have enjoyed the benefits of a stable democratic republic and limited government.
The Constitution provided a model for a “tolerable administration of justice” and peace and commerce between nations and the states with few exceptions. It prohibited tariffs and duties between states so that the United States became a gigantic free-trade zone. It also gradually reduced tariffs and became the powerhouse of globalization.
If he were alive today, Adam Smith would be pleased with the incredible growth and higher standards of living, especially after the collapse of the Berlin Wall and the Soviet socialist model.
Free trade was his biggest success, as nation after nation lowered trade barriers and enjoyed the benefits of globalization. In an age of protectionism, Adam Smith boldly declared, “If a foreign country can supply us with a commodity that is cheaper than we ourselves can make it, better to buy it of them.”
The Bull Market Is Threatened in Two Ways
But beginning in the 21st century, the Economic Freedom of the World index has slowed down or declined.
The Adam Smith model has come under attack by Keynesians, Marxists, and interventionists who want a return to top-down policies of authoritarian government, deficit spending, tax hikes, “fair trade,” and overregulation, all in the name of fairness, equity, and saving the planet.
No longer are there “peace, easy taxes, and a tolerable administration of justice,” but rather, a renewal of protective tariffs (the highest in a century); wars breaking out in Ukraine, Russia, Iran, the Middle East, and Latin America; and strongmen ignoring the democratic process.
This year, the stock market has struggled against the backdrop of two new threats: a renewed trade war and growing geopolitical instability.
Right now, only gold is holding up. Make sure you have gold in your portfolio.
Yet, like Adam Smith, I remain optimistic. He wrote 250 years ago, “The uniform, constant, and uninterrupted effort of every man to better his condition… is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration.”
Long live Adam Smith!
Two Ways to Celebrate Adam Smith and Free-Market Economics
Recently, Michael Shermer, publisher of Skeptic magazine, commissioned me to write a cover story in honor of Adam Smith and why he is so important, which is titled “The Economics of Life Made Simple.” It’s been a hit ever since.
In this essay, I tried to answer fundamental questions about money, the economy, and the Adam Smith laissez-faire model: What is the secret to our tremendous economic growth over the past 250 years? Why are young people so attracted to socialism? What is the economists’ solution to global warming? Why is inflation coming back? Is capitalism inherently unstable?
David Berkovitz, who teaches business law and accounting at Chapman University, recently told me, “Mark, I always wanted to understand economics, so I read Economics for Dummies, and still couldn’t understand it… until I read your essay, ‘The Economics of Life Made Simple.’ It should be required reading for everyone in college.”
I’ve had so many requests for this article that I’ve reprinted the essay four times and sent copies to friends and handed them out at various conferences. A professor at the University of The Bahamas bought 50 copies to hand out to his students. Coin dealer Van Simmons asked for 25 copies to hand out to his clients.
A highly successful lawyer from North Dakota attended FreedomFest and picked up a copy. He told a colleague, “This is the best brief in economics that I’ve ever read,” and made copies to send out to all his clients.
One Christian minister, Dallin H. Oaks, wrote, “I have just finished reading your ‘Economics of Life Made Simple.’ Marvelous! I have never read a better expression by a sophisticated professional who has written to the clear understanding of laymen. Congratulations! I hope this will be widely circulated. It is very important.”
One young lady, who wishes to remain anonymous, has done just that. She bought 200 copies to give to students when they graduate from high school or college. She says, “It explains free-market capitalism like no other essay!”
“It All Started With Adam… Adam Smith, That Is”
Second, I’ve written a bold, new history of “the worldly philosophers” – the dramatic story of how Adam Smith and his “system of natural liberty” succeeded in a world of conflict.
The Making of Modern Economics has a running plot and a singularly heroic figure, Adam Smith, who constantly comes under attack by the Marxists, Keynesians, and socialists. He is sometimes left for dead, only to be resuscitated by the French laissez-faire school, the Austrians, the Chicagoans, and the supply-siders and end up triumphing in the end!
Every economist is judged as either a supporter of the House That Adam Smith Built or a dissenter who wants to tear it down and build his own. No other textbook does it better. As one historian says, “It’s unputdownable!”
Milton Friedman said it best: “All histories of economics are BS – Before Skousen!”
Surprise, Surprise! The “Pub Date” for My Book Was…
What’s amazing is that after all the rewrites and editing of my history, the publication date in 2001 turned out to be March 9 – the same pub date as the first edition of The Wealth of Nations in London in 1776! Thus, it made perfect sense that Adam Smith would be the hero of my book.
I tell the inspiring story here.
My book is now in its fourth edition, published by Routledge. The paperback edition retails for $55, but you pay only $37 per copy if you buy it at skousenbooks.com. I autograph each copy and mail it at no extra charge inside the U.S.
In honor of the anniversary of the publication dates in 1776 and 2001, I’ll date each copy March 9, 2026.
Note: Everyone who buys a copy of The Making of Modern Economics from me will receive a free copy of my essay, “The Economics of Life Made Simple.”
If you want to buy the essay alone, the cost is $3 each (with a minimum order of three copies).